Many subjects in lab experiments show considerable risk aversion in small-stakes gambles. This is counter to the predictions of expected utility theory for any reasonable degree of risk aversion (Rabin 2000) but is consistent with loss aversion in prospect theory. Benjamin, Brown, and Shapiro (forthcoming) show that math skills reduce small-stakes risk aversion, consistent with broader evidence...

Uncertainty has an almost negligible impact on project value in the standard economic model. I show that a comprehensive evaluation of uncertainty and uncertainty attitude changes this picture fundamentally. The illustration of this result relies on the discount rate, which is the crucial determinant in balancing immediate costs against future benefits, and the single most important determinant...

Previous studies on the effect of CS amount/duration on the conditioning of taste aversion have reported that animals having greater contact with the CS acquire greater aversion. These findings appear to contradict studies of es preexposure, which show that greater contact with the CS results in less aversion. In the present research, the effect of CS amount was shown to depend on the CS-US int...

The classic definition of risk aversion, which equates risk aversion with concavity of the utility function, is inherently scale-dependent, in the sense that it is not preserved under monotone (non-linear) transformations of underlying scale, most commonly taken to be money. This limits the notion to monetary, or liquid, goods. We introduce an axiomatic definition of risk aversion, based on the...

Risk aversion is a common behavior universal to humans and animals alike. Economists have traditionally defined risk preferences by the curvature of the utility function. Psychologists and behavioral economists also make use of concepts such as loss aversion and probability weighting to model risk aversion. Neurophysiological evidence suggests that loss aversion has its origins in relatively an...

Both the equity premium puzzle and the credit spread puzzle address the problem of a reasonable size of agents’ risk aversion. The empirical estimation of risk aversion parameters is impeded by the fact that observed prices depend on risk preferences and probability beliefs. The market for German redemption lottery bonds constitutes a clean environment to estimate risk aversion coefficients fro...

This paper studies comparative risk aversion between risk averse agents in the presence of a background risk. Although the literature covers this question extensively, our contribution differs from most of the literature in two respects. First, background risk does not need to be additive or multiplicative. Second, the two risks are not necessary mean independent, and may be conditional expecta...

This paper reports data from three subject pools (n=717 subjects) using techniques based on those of Loewenstein, et al. (1989) and Blanco, et al. (2011) to obtain parameters, respectively, of stated and revealed inequality aversion. We provide a replication opportunity for those papers, with two innovations: (i) a design which allows stated and revealed preferences to be compared at the indivi...

It has been suggested that inequity aversion is a mechanism that evolved in humans to maximize the pay-offs from engaging in cooperative tasks and to foster long-term cooperative relationships between unrelated individuals. In support of this, evidence of inequity aversion in nonhuman animals has typically been found in species that, like humans, live in complex social groups and demonstrate co...

This paper focuses on the study of decision making under risk. We, first, recall some model-free definitions of risk aversion and increase in risk. We propose a new form of behavior under risk that we call anti-monotone risk aversion (hereafter referred to as ARA) related to the concept of anti-comonotony a concept investigated in Abouda, Aouani and Chateauneuf (2008). Note that many research h...